Risk of Ruin

Undoubtedly, this is mentioned in this forum, but the thread I saw was years old - and I'm not sure if the folks that posted intelligent responses are still around.


I like video poker. A lot. But, it's gotten to the point where if i'm playing $1, even if I get a quad, the $125 on JoB isn't really enough to get me excited. And, after my disastrously undisciplined, yet successful gaming session (+2k on the $5 vp machine), I KNOW I was lucky. It could have very easily gone the other way with me losing that 2k even faster than I won it. (took about 3 minutes!) How do I calculate the probability of ruin? As I learn more (by doing, rather than by reading, I'm sad to say) I realize how foolish I've been to expect to win all the time. (who goes expecting to lose? and if you expect to lose, why go?)

I'm learning to like blackjack, too. Rather than you folks spoon-feed me, I want to learn how to calculate the risk of ruin for both.

I know that if I play BJ by the AP strategy,(the gift shop has this nifty card which I hope to memorize) the house edge for BJ is minimized. As such, I believe with a 6 deck show, no surrender, dealer hitting on soft 17, I think the house edge is is about 1%.

Can I just take the same house edge percentage from black jack and plug in the house edge from a crappy 5/8 JoB pay table and get a trustworthy result?

I'm at the point where I can take more than my previous limit of $400 per trip.

My VP sessions are about 3 hours - but I generally will have 5 sessions per trip, and 1 black jack session. I plan to play $5 black jack until I have that table memorized, then move up to $10.

As for VP, I'd like to play high limits, because of the bigger return, but I know the risk is much higher as well. So - with 15 hours of VP at the $1 level, how much bankroll is required?

For blackjack, $5 Bet x 0.01 HE x 80 hands/hr x 3 hrs = $12
standard deviation is $5 x sqrt(80 x 3) = $109.54

So, for 3 hours of blackjack at $5 per bet, I can expect to win/lose in the range of roughly -$125 to +$125. (+/- 1 std. deviation)

If that math is correct, I can understand how the answer is arrived - but what I don't really get is what the answer means. I just assume that PapaChubby knows about that which he posts on the standard deviation of blackjack returns. But, where money's involved, that's a risky assumption.

What's the confidence interval? How confident can I be that a bankroll would last for the 3 hours? I get that a standard deviation is a reference of sorts to the amount of variation of the return. I just don't know how confident I can be in the result.

Likewise, for VP on a $1 machine,

$5 Bet * .03 (I dare not assume perfect play - I make mistakes sometimes, not often, but maybe twice per 3 hour session.) * 720 * 15 =1620
standard deviation is $5 x sqrt(720 x 15) = $519.62

So, if this math is correct, within 1 standard deviation, my expected loss/win range would be from -2140 to +2140?

Please forgive my ignorance and any bad math.

Risk of Ruin is generally quoted as 90:10. It assumes no tips, no comps, just straight chips for a certain number of hours of play at a certain rate and no companion playing somewhere at some other game.

Its really a measure of staying power. If you walk up to craps game with twenty dollars you can be ahead from the get go for hours, but you can also be broke in minutes. The real question is did you have a decent run for you to overcome normal variance in teh game.

Obviously it is mathematical, not real world.

I tip dealers and do it right away.

That subtracts from my Risk of Ruin ratio.

My meals are comped - and tips come from my wallet - not from my bankroll.

I tip a dealer $ for each black jack I get - when they go on break - so both the regular and relief dealers can see I'm not a total cheapskate.

So, in a 3 hour session, depending on when I sit down, it's essentially 3 tipping opportunities. If I get a lot of blackjacks, they get a little more.

If you tip for every blackjack, even $1... that's about 1 in every 21 hands. If you're playing any kind of "decent" game that gets you 100 hands per hour, you're losing $5/hour from your EV just tipping. If you're playing reds, like $10-$100, with an EV of like $15/hour, you're losing 33% of your EV to tipping.

Pro's don't usually tip... I do, but sparse. To me, a tip is the dealer making the game more fun/exciting/etc with their personality. They don't tip me back when I lose to 10 straight dealer blackjacks, so to tip based off the cards seems silly. If the dealer makes the game better, then at some point I'll tip. If they don't, then no tips. They're getting paid to do their job, which is deal the cards. After that is where a tip comes in... My opinion at least.

I don't want to open a HUGE tipping debate (which there's already another thread about). My point here was to show you that tipping on every BJ you get not only kills your hourly, but also think of what that does to your BJ's. Half the reason counting works is because you get paid 3:2 on your BJ's and the dealer does not. You're essentially taking $1 from every one of your BJ's away. That's a really bad idea =/.


...Now on to your RoR. Your BJ game should be more around .5%. If it's higher than that, you're playing a really bad game =/ (though some 8D H17 = .66% and with good PEN it's still beatable). Now, assuming you have a 9/6 JoB and an average BJ game... They're both about .5% HE. So is the RoR and bankroll required the same for both?? NO WAY!! There's a very important thing called variance. The number used in SD calculations for BJ is 1.1 (really it's about 1.14). VP variance depends on the game you're playing. The Wizard has a page on the different VP games and all of their associated maths/variances/etc. If I recall correctly JoB was the LOWEST of the VP games with something like 4.x variance. Thus, you can see here the variance of VP is already 4 times as much as BJ. This means your bankroll will swing a ton more playing VP and thus you'll need a bigger bankroll to get your RoR down to the same percentage as you would want for BJ. There's a TON of great information on the Wizards Odds site. Check it out and you should be able to find your answers =).